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Realogy parent files for $1 billion IPO
(Reuters) - Realogy Corp's parent Domus Holdings Corp, owned by Apollo Group and Paulson & Co, plans to raise up to $1 billion in an initial public offering as the real estate services company looks to lighten its debt load.
The IPO market has been hit by poor pricing, pulled deals and delayed offerings in the recent months, but the housing market has been showing signs of recovery.
The U.S. spring home-selling season got off to a strong start in April, with rising sales and prices providing evidence that a housing market recovery was gaining some traction.
Many economists think the housing sector will add to economic growth in 2012 for the first time in seven years.
"While conditions remain far from robust, for the first time in years there may be enough optimism out there for a housing-related company to IPO at an acceptable valuation," Morningstar analyst James Krapfel said.
Realogy was taken private by Apollo Group for about $6.65 billion in December 2006. Currently, Apollo owns about 66 percent, while Paulson & Co has about 21 percent stake in the parent company.
Apollo Management APOLO.UL will continue to own a majority of the voting power of its outstanding common stock, Domus Holdings said in a regulatory filing.
Domus, which franchises brokerage brands like Century 21, Coldwell Banker, Era, Sotheby's International Realty and Better Homes, plans to use the proceeds from the offering to repay debt.
Domus, which has $7.23 billion in debt, plans to bring it down to about $4 billion post the offering as it expects its security holders, including Apollo and Paulson & Co, to convert $2 billion worth of convertible notes into shares.
"It's a desperate deal by Apollo and Paulson. They are simply trying to reduce debt in a highly leveraged company by getting money from investors. I think it's a bad deal for investors," Francis Gaskins, partner of IPO research site IPOdesktop.com said.
The company provides real estate brokerage, financing and relocation services, and had recorded revenue of about $4 billion in 2011. However, it is yet to turn a profit since being taken private five years ago.
The Parsippany, New Jersey-based Domus Holdings, which counts Brookfield Residential Property Services, an affiliate of Brookfield Asset Management Inc (BAMa.TO), and RE/MAX International Inc REMAX.UL among its competitors, did not reveal how many shares it plans to offer and their price.
Domus did not reveal the names of the underwriters and the stock exchange it plans to list on.
The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.
(Reporting by Ashutosh Pandey and Sharanya Hrishikesh; Additional reporting by A. Ananthalakshmi in Bangalore; Editing by Anil D'Silva and Supriya Kurane)
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